UMC Reports 2005 Fourth Quarter Results: Fourth Quarter Revenue Increased 16.5% QoQ to NT$27.47 Billion, EPA of NT$0.16
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UMC Reports 2005 Fourth Quarter Results: Fourth Quarter Revenue Increased 16.5% QoQ to NT$27.47 Billion, EPA of NT$0.16

TAIPEI, R.O.C—(BUSINESS WIRE)—Feb. 14, 2006— United Microelectronics Corporation (NYSE: UMC; TSE: 2303)

Fourth Quarter 2005 Overview(1)

-- Revenue increased 16.5% sequentially to NT$27.47 billion (US$837 million)

-- Net income increased 40.6% sequentially to NT$3,044 million (US$93 million)

-- Wafer shipments increased 9.3% sequentially to 810 thousand 8-inch equivalent wafers

-- EPS was NT$0.16; EPADS was US$0.024

-- Revenue from 90nm technology increased to 15% of total revenue

(1) Unless otherwise stated, all financial figures discussed in this announcement are prepared in accordance with ROC GAAP, which differ in some material respects from generally accepted accounting principles in the United States. They are unaudited, unconsolidated, and represent comparisons among the three-month period ending December 31, 2005, the three-month period ending September 30, 2005, and the equivalent three-month period that ended December 31, 2004. For all 4Q05 results, New Taiwan Dollar (NT$) amounts have been converted into U.S. dollars at the exchange rate of NT$32.83 to one U.S. dollar.

United Microelectronics Corporation (NYSE: UMC; TSE: 2303) ("UMC" or "the Company"), a leading global semiconductor foundry, today announced its unconsolidated operating results for the fourth quarter of 2005.

"We are pleased to report another quarter of sequential growth," said UMC Chairman and CEO, Dr. Jackson Hu. "Increased demand for wireless communication products, PC chipsets and LCD drivers in the computer segment was the key driver for the growth. Higher shipments of leading-edge technologies were also a primary reason for the 2% sequential increase in blended ASP. As a result, our Q4 revenue grew 16.5% and gross profit increased 68.3% sequentially."

Dr. Hu continued, "Many of you may already know that the UMC Board of Directors elected me to the position of Chairman at their last meeting following the resignation of former UMC Chairman Bob Tsao and former vice Chairman John Hsuan on January 9. I would like to take this opportunity to comment on my vision of UMC's direction going forward."

"In order to best leverage Taiwan's unique environment and business culture, UMC will reinvent itself in the spirit of a start-up company. The attributes of a start-up company include solid execution, a low profile attitude, a strong focus on customer satisfaction, and the ability to quickly deliver the technologies and services that customers require. We are fully prepared to use the considerable financial strength that we have accumulated over the years to fund aggressive research and development programs, expand production capacity, and retain and hire the best people in the industry."

"We will focus on our core operations, making a complete effort to maintain and further strengthen our technological leadership, and continue to improve our foundry service model. UMC has an excellent team, and over the last two years we have seen great improvement in many areas including the development of advanced process technologies, the enhancement of production efficiency, the expansion of our customer base, and the development of intellectual property. I am extremely proud of the accomplishments of UMC's world-class team, and you can expect to see a positive impact on our operating results in the near future."

Summary of Operating Results


----------------------------------------------------------------------
Operating Results
======================================================================
(Amount: NT$ million)                            QoQ %          YoY %
                                  4Q05    3Q05   change  4Q04   change
----------------------------------------------------------------------
Revenue                          27,468  23,579   16.5  28,229   (2.7)
Gross Profit                      4,973   2,954   68.3   6,488  (23.4)
Operating Expenses               (4,045) (3,514)  15.1  (3,649)  10.9
Operating Income (Loss)             928    (560)     -   2,839  (67.3)
Non-op. Income (Expenses)         2,116   2,725  (22.3) (1,506)     -
Net Income                        3,044   2,165   40.6   1,333  128.4
EPS (NT$ per share)                0.16    0.12           0.07
    (US$ per ADS)                 0.024   0.018          0.011
----------------------------------------------------------------------


Revenue increased 16.5% QoQ to NT$27.47 billion, from NT$23.58 billion in 3Q05, and decreased 2.7% YoY, from NT$28.23 billion in 4Q04. Gross profit was NT$4.97 billion, or 18.1% of revenue, compared to NT$2.95 billion, or 12.5% of 3Q05 revenue. Operating profit for the quarter was NT$928 million, or 3.4% of revenue, an improvement from our operating loss of NT$560 million in 3Q05. Revenue growth was the key driver for the higher profits and margins during the fourth quarter. Net income in 4Q05 was NT$3.04 billion, an increase of 40.6% compared to NT$2.17 billion in 3Q05.

Earnings per ordinary share (EPS) for the quarter were NT$0.16. Earnings per ADS (EPADS) were US$0.024. This compares with 3Q05 earnings per ordinary share of NT$0.12 and earnings per ADS of US$0.018. One ADS represents five Taiwan-listed ordinary shares. The basic weighted average number of outstanding shares in 4Q05 was 17,405,308,258, compared to 18,433,685,226 shares in 3Q05 and 18,901,527,061 shares in 4Q04. The diluted weighted average number of outstanding shares was 17,694,089,155 in 4Q05, compared to 18,610,270,285 shares in 3Q05 and 19,152,188,319 shares in 4Q04. The decrease in basic and diluted weighted average outstanding shares in 4Q05 was mainly due to the execution of the Company's 9th treasury share repurchase program in October and early November.

Detailed Financials Section

Depreciation and amortization expenses totaled NT$12.73 billion in 4Q05, compared to NT$12.59 billion in 3Q05. Depreciation within COGS increased by 2.4% to NT$10.97 billion. Other manufacturing costs within COGS increased to NT$11.53 billion, which reflected higher costs associated with an increase in wafer shipments. Total operating expenses increased by 15.1% to NT$4.05 billion. G&A expenses increased by 19.7% to NT$1.05 billion, largely because of employee bonus payments. R&D expenses increased by 18% to NT$2.38 billion, mainly due to greater expenses associated with 65nm technology development. As a result, the total R&D expense was 8.7% of revenue in 4Q05.
----------------------------------------------------------------------
COGS & Expenses
======================================================================
                                                QoQ %           YoY %
(Amount: NT$ million)           4Q05     3Q05   change   4Q04   change
----------------------------------------------------------------------
Revenue                        27,468   23,579   16.5   28,229   (2.7)
COGS                          (22,495) (20,625)   9.1  (21,741)   3.5
  Depreciation                (10,969) (10,712)   2.4   (9,363)  17.2
  Other Mfg. Costs            (11,526)  (9,913)  16.3  (12,378)  (6.9)
Gross Profit                    4,973    2,954   68.3    6,488  (23.4)
Gross Margin (%)                 18.1%    12.5%           23.0%
Total Operating Exp.           (4,045)  (3,514)  15.1   (3,649)  10.9
  G&A                          (1,050)    (877)  19.7     (841)  24.9
  Sales & Marketing              (612)    (618)  (1.0)    (658)  (7.0)
  R&D                          (2,383)  (2,019)  18.0   (2,150)  10.8
Operating Income(Loss)            928     (560)     -    2,839  (67.3)
Operating Margin (%)              3.4%    -2.4%           10.1%
----------------------------------------------------------------------


Net non-operating income during 4Q05 was NT$2.12 billion. Total gains on the disposal of investments were NT$1.52 billion, including a gain from the sale of MediaTek shares of NT$1.29 billion. Net investment income was NT$142 million, which included NT$271 million in income from Unimicron, NT$193 million in income from Novatek, and a NT$425 million loss from UMCJ in 4Q05.
----------------------------------------------------------------------
Non-operating Income (Expenses)
======================================================================
(Amount: NT$ million)                             4Q05   3Q05   4Q04
----------------------------------------------------------------------
Net Non-operating Income (Exp.)                  2,116  2,725  (1,506)
  Net Interest Income (Expense)                     38      0      (4)
  Net Investment Income (Loss)                     142    111  (1,955)
  Gain on Disposal of Investment                 1,523  2,133   1,571
  Exchange Gain (Loss)                              40    171    (754)
  Others                                           373    310    (364)
----------------------------------------------------------------------


Net cash inflow was NT$24.81 billion in 4Q05. The increase in operating cash flow mainly reflects higher profitability during the quarter. The NT$7.35 billion of financing cash inflow included NT$12.48 billion cash inflow from the Euro Convertible Bond (ECB) issuance and NT$4.8 billion cash outflow for share repurchases. Over the next 12 months, the company expects to repay NT$10.25 billion in corporate bonds.
----------------------------------------------------------------------
Cash Flow Summary
======================================================================
                                      For the 3-Month  For the 3-Month
                                      Period Ended     Period Ended
(Amount: NT$ million)                 Dec. 31, 2005    Sep. 30, 2005
----------------------------------------------------------------------
Cash Flow from Operations                     15,507           11,298
  Net Income                                   3,044            2,165
  Depreciation & Amortization                 12,731           12,594
  Changes in working capital                   1,678           (2,533)
  Others                                      (1,946)            (928)
Cash Flow from Investing                       1,939           (2,444)
  Capital Expenditures                        (7,207)          (3,568)
  Others                                       9,146            1,124
Cash Flow from Financing                       7,354           (5,113)
Effect of Exchange Rate                            5              (14)
Net Cash Flow                                 24,805            3,727
----------------------------------------------------------------------


Cash and cash equivalents increased NT$24.81 billion to NT$96.60 billion, which was mainly due to higher cash inflows from operations and financing. The increase in inventory primarily came from the increase of finished goods. Days sales outstanding(2) decreased slightly to 43 days, and average inventory turnover increased to 40 days.

(2) Days Sales Outstanding = 365/ { (Operating revenues for the three-month period end *4)/ { (Beginning NR&AR balance, net + Ending NR&AR balance, net)/2 } }

Average Inventory Turnover = 365/ { (COGS for the three-month period end *4)/ { (Beginning Inventory balance, net + Ending Inventory balance, net)/2 } }
----------------------------------------------------------------------
Current Assets
======================================================================
(Amount: NT$ billion)                           4Q05    3Q05    4Q04
----------------------------------------------------------------------
Cash & Cash Equivalents                         96.60   71.79   83.35
Notes & Accounts Receivable                     12.36   13.73   10.70
  Days Sales Outstanding                           43      45      45
Inventory                                        9.96    9.38    8.54
  Avg. Inventory Turnover                          40      39      38
Total Current Assets                           128.27  102.51  110.37
----------------------------------------------------------------------


Total liabilities increased by NT$13.87 billion to NT$67.94 billion in 4Q05. The increase in long-term liabilities is attributable to the new ECB issuance in 4Q05. UMC's Debt to Equity ratio was 26% at the end of 4Q05.
----------------------------------------------------------------------
Liabilities
======================================================================
(Amount: NT$ billion)                              4Q05   3Q05   4Q04
----------------------------------------------------------------------
Total Current Liabilities                         28.30  21.81  23.28
  Accounts Payable                                 4.10   4.51   4.44
  Short-term Credit / Bonds                       10.25   6.08   4.72
  Others                                          13.95  11.22  14.12
Long-term Liabilities                             36.01  28.50  33.61
Total Liabilities                                 67.94  54.07  63.18
Debt to Equity                                       26%    21%    24%
----------------------------------------------------------------------


Analysis of Revenue(3)

The percentage of revenue contributed from North America grew to 49% in 4Q05. The percentage of revenue contributed from Europe and Japan remained unchanged.
                     Revenue Breakdown by Region
----------------------------------------------------------------------
Region                          4Q05    3Q05    2Q05    1Q05     4Q04
======================================================================
North America                     49%     48%     44%      49%     49%
----------------------------------------------------------------------
Asia Pacific                      42%     43%     45%      38%     32%
----------------------------------------------------------------------
Europe                             7%      7%      9%      11%     16%
----------------------------------------------------------------------
Japan                              2%      2%      2%       2%      3%
----------------------------------------------------------------------


The percentage of revenue from advanced 90nm business increased to 15% from 14% in 3Q05, mainly due to stronger demand for 90nm communication chips. The percentage of revenue from 0.13um technology increased to 23% due to stronger demand for consumer and communication chips. The percentage of revenue from 0.18um and below increased to 67% in 4Q05 from 61% in 3Q05.
                    Revenue Breakdown by Geometry
----------------------------------------------------------------------
Geometry                            4Q05  3Q05    2Q05    1Q05    4Q04
======================================================================
90nm                                 15%   14%      9%      7%      8%
----------------------------------------------------------------------
0.13um                               23%   18%     14%     20%     19%
----------------------------------------------------------------------
0.15um                               10%   10%     10%     12%     16%
----------------------------------------------------------------------
0.15um less than x less than=0.18um  19%   19%     20%     20%     19%
----------------------------------------------------------------------
0.18um less than x less than=0.25um   6%    8%     11%     10%     12%
----------------------------------------------------------------------
0.25um less than x less than=0.35um  19%   22%     25%     20%     17%
----------------------------------------------------------------------
0.5um and above                       8%    9%     11%     11%      9%
----------------------------------------------------------------------


The percentage of revenue from IDM customers increased to 33% in 4Q05 from 29% in 3Q05.
                  Revenue Breakdown by Customer Type
----------------------------------------------------------------------
Customer Type                    4Q05    3Q05    2Q05    1Q05    4Q04
======================================================================
Fabless                            67%     71%     76%     69%     66%
----------------------------------------------------------------------
IDM                                33%     29%     24%     31%     34%
----------------------------------------------------------------------
System                              0%      0%      0%      0%      0%
----------------------------------------------------------------------


Revenue from the communication segment increased to 54% of total revenue in 4Q05 because of strong demand for handset components. The percentage of revenue from the computer segment increased slightly to 20% due to strong demand for PC components.
                 Revenue Breakdown by Application (1)
----------------------------------------------------------------------
Application                      4Q05    3Q05    2Q05    1Q05    4Q04
======================================================================
Computer                           20%     19%     20%     24%     24%
----------------------------------------------------------------------
Communication                      54%     47%     44%     45%     49%
----------------------------------------------------------------------
Consumer                           24%     32%     32%     26%     23%
----------------------------------------------------------------------
Memory                              1%      1%      2%      2%      1%
----------------------------------------------------------------------
Others                              1%      1%      2%      3%      3%
----------------------------------------------------------------------

(1) Computer consists of ICs such as HDD controllers, DVD-ROM/CD-ROM
drives ICs, LCD drivers, graphic processors, and PDAs. Communication
consists of xDSL, DSP, WLAN, LAN controllers, handset components,
caller ID devices, etc. Consumer consists of ICs used for DVD players,
game consoles, digital cameras, smart cards, toys, etc. Memory
consists of DRAM, SRAM, Flash, EPROM, ROM, and EEPROM.


(3) Revenue in this section represents net wafer sales. All revenue breakdown tables exclude JV's and subsidiaries.

Blended Average Selling Price Trend

The blended average selling price (ASP) rose 2% in US dollar terms during 4Q05 due to increasing demand for advanced process technologies. This was in line with the ASP guidance previously provided by UMC.

(To view ASP trend, visit http://www.umc.com/english/investors/4Q05_ASP_trend.asp)

Shipment and Utilization Rate(4)

Wafer shipments rose 9.3% sequentially to 810 thousand, an increase from 741 thousand 8-inch equivalent wafers in the previous quarter. While ASP was up by 2%, the weaker-than-expected NT$ also contributed to the growth of revenues in local currency. Overall utilization rate for the quarter improved to 86%, compared to 78% for the pervious quarter.
                           Wafer Shipments
----------------------------------------------------------------------
                                 4Q05    3Q05    2Q05    1Q05    4Q04
======================================================================
Wafer Shipments
('000 8-inch eq.)                 810     741     630     564     657
----------------------------------------------------------------------

                 Quarterly Capacity Utilization Rate
----------------------------------------------------------------------
                                 4Q05    3Q05    2Q05    1Q05    4Q04
======================================================================
Utilization Rate                   86%     78%     65%  63%(1)     72%
----------------------------------------------------------------------
Total Capacity
('000 8-inch eq.)                 973     970     962     950     918
----------------------------------------------------------------------

(1) 1Q05 utilization rate was calculated based on 1Q05 available
capacity, which is about 94% of total capacity after factoring in a 6%
productivity loss due to annual scheduled maintenance.


(4) Quarterly utilization rate = Quarterly wafer out / Estimated quarterly capacity

Capacity(5)

Capacity for 4Q05 was 973 thousand 8-inch equivalent wafers. The incremental increase in capacity was due to the expansion at Fab 12A. On the other hand, capacities at Fab 8D and Fab 8F decreased due to a change in production mix. The estimated installed capacity in 1Q06 is 982 thousand 8-inch equivalent wafers. However, estimated available capacity in 1Q06 is approximately 5% to 8% lower than estimated installed capacity due to scheduled annual maintenance.
 Annual Capacity in
 thousands of 8-inch wafer equivalents
 ---------------------------------------------------------------------
       FAB              Geometry
                          (um)           2005    2004    2003    2002
 =====================================================================
 Fab 6A       6"       3.5 - 0.45        344     346     352     349
 ---------------------------------------------------------------------
 Fab 8AB      8"       0.5 - 0.25        816     796     801     853
 ---------------------------------------------------------------------
 Fab 8C       8"      0.35 - 0.15        401     386     325     355
 ---------------------------------------------------------------------
 Fab 8D       8"      0.18 - 0.09        274     256     238     214
 ---------------------------------------------------------------------
 Fab 8E       8"       0.5 - 0.18        404     401     354     376
 ---------------------------------------------------------------------
 Fab 8F       8"      0.25 - 0.15        378     349     342     312
 ---------------------------------------------------------------------
 Fab 8S (1)   8"      0.25 - 0.15        278     131      0       0
 ---------------------------------------------------------------------
 Fab 12A      12"     0.18 - 0.065       597     392     234     119
 ---------------------------------------------------------------------
 Fab 12i (2)  12"     0.13 - 0.065       363     101      0       0
 =====================================================================
   Total (3)                            3,855   3,158   2,646   2,578
 =====================================================================
   YoY Growth Rate                         22%     19%      3%    -11%
 ---------------------------------------------------------------------


  Quarterly Capacity in
  thousands of 8-inch wafer equivalents
  ---------------------------------------
     FAB      1Q06E    4Q05    3Q05  2Q05
  =======================================
  Fab 6A         82      86      86    86
  ---------------------------------------
  Fab 8AB       204     204     204   204
  ---------------------------------------
  Fab 8C        100     100     100   100
  ---------------------------------------
  Fab 8D         63      66      68    68
  ---------------------------------------
  Fab 8E        101     101     101   101
  ---------------------------------------
  Fab 8F         93      93      95    95
  ---------------------------------------
  Fab 8S         69      69      69    69
  ---------------------------------------
  Fab 12A       175     160     153   145
  ---------------------------------------
  Fab 12i        95      94      94    94
  =======================================
  Total (3)     982     973     970   962
  ---------------------------------------

(1) Former fab of SiSMC, which was acquired from Silicon Integrated
Systems in July 2004.

(2) Former fab of UMCi, a UMC wholly owned subsidiary in December 2004
that was merged into UMC in April 2005

(3) One 6-inch wafer is converted into 0.5625(62/82) 8-inch equivalent
wafer; one 12-inch wafer is converted into 2.25(122/82) 8-inch
equivalent wafers.


(5) Estimated capacity numbers are based on calculated maximum output rather than designed capacity. The actual capacity numbers may differ depending upon equipment delivery schedules, pace of migration to more advanced process technologies, and other factors affecting production ramp-up.

CAPEX

The total capital expenditure for 2005 was US$0.7 billion, 96% of which accounted for capacity expansion and R&D at our 300mm facilities. The capital expenditure budget for 2006 is expected to be US$1 billion. 98% of the spending is likely to be for expansion and R&D at our 300mm facilities.
 UMC Capital Expenditure by Year
----------------------------------------------------------------------
  (US$ billion)    2005     2004     2003     2002     2001     2000
======================================================================
      CAPEX       $0.7(1)   $1.53    $0.37     $0.8     $1.1     $2.8
----------------------------------------------------------------------

 2005 CAPEX
----------------------------------------------------------------------
                      8" fab      12" fab  12" R&D        Total
======================================================================
 UMC                          4%      83%      13%   US$0.7 billion(1)
----------------------------------------------------------------------
 UMCJ                       100%       -        -    US$22 million
----------------------------------------------------------------------

 2006 CAPEX Plan
----------------------------------------------------------------------
                      8" fab      12" fab  12" R&D        Total
======================================================================
 UMC                          2%      83%      15%   US$1 billion
----------------------------------------------------------------------

(1) 2005 CAPEX contained UMC 2005 full year CAPEX and UMCi CAPEX
during 1Q05.


Long-term Investments(6)
      Consolidated Long-term Investments as of December 31, 2005

               -------------------------------------------------------
                    As of End of 4Q05           As of End of 3Q05
----------------------------------------------------------------------
(Amount: NT$     Book          Fair          Book          Fair
 million)        value   %     value   %     value   %     value   %
======================================================================
Foundry
 Industry       10,745   28   11,988   16   11,470   30   12,795   18
----------------------------------------------------------------------
Strategic
 Semiconductor
 Investments    12,274   33   44,198   57   12,524   32   38,645   56
----------------------------------------------------------------------
Other
 Investments    14,795   39   20,790   27   14,678   38   18,267   26
======================================================================
Total           37,814  100   76,976  100   38,672  100   69,707  100
----------------------------------------------------------------------


As of December 31, 2005, the total book value of long-term investments was NT$37.81 billion, and the estimated fair value of long-term investments was NT$76.98 billion. The decrease in book value of foundry industry investments was mainly due to the investment loss of UMCJ. The increase in fair value of strategic semiconductor investments and other investments was due to an increase in the share prices of several investments. Due to the adoption of SFAS No.34, UMC will mark long-term investments to market value beginning Jan 1, 2006. This section, therefore, will be discontinued when we report 1Q06 results.

(6) The long-term investment information disclosed is UMC Group consolidated data, which includes UMC, Hsun Chieh Investment Corp., Fortune Venture Capital Corp., TLC Capital Corp., UMC Capital Corp., and Unitruth Investment Corp.. For publicly quoted investments, fair value is calculated by multiplying the average daily closing price of the last month of the accounting period (December of 2005) with the number of shares owned by the UMC Group as of December 31, 2005. Otherwise, book value or underlying equity net value of investments is taken as recorded on the balance sheet at the end of the accounting period (December 31, 2005) and is used as the fair value.

Brief Summary of Full Year 2005 Results

-- Revenue decreased 22.6% YoY to NT$90.78 billion, from NT$117.31 billion in 2004

-- Gross profit decreased 68.7% YoY to NT$11.20 billion, from NT$35.82 billion in 2004

-- Net income decreased 77.9% YoY to NT$7.03 billion, from NT$31.84 billion in 2004

-- EPS was NT$0.38; EPADS was US$0.058. This compares with EPS of NT$1.70 or EPADS of US$0.259 for 2004

-- Revenue from 90nm increased significantly and accounted for 11% of total wafer sales in 2005, compared to 3% in 2004. Revenue from 0.18um and below accounted for 60% of total revenue, up from 55% in 2004
----------------------------------------------------------------------
Operating Results
======================================================================
                                                               YoY %
(Amount: NT$ million)                     2005       2004      change
----------------------------------------------------------------------
Revenue                                   90,776    117,312     (22.6)
Gross Profit                              11,196     35,821     (68.7)
Operating Expenses                       (13,864)   (11,366)     22.0
Operating Income (Loss)                   (2,668)    24,455         -
Non-op. Income                             9,696      7,422      30.6
Net Income                                 7,027     31,843     (77.9)
EPS   (NT$ per share)                       0.38       1.70
      (US$ per ADS)                        0.058      0.259
----------------------------------------------------------------------



                 Annual Sales Breakdown in Revenue

-------------------------------   ----------------------------------
Region          2005     2004     Technology         2005     2004
===============================   ==================================
North America      48%      45%   90nm                  11%       3%
-------------------------------   ----------------------------------
Asia Pacific       42%      34%   0.13um                19%      15%
-------------------------------   ----------------------------------
Europe              8%      17%   0.15um                11%      13%
-------------------------------   ----------------------------------
Japan               2%       4%   0.15um less than 
-------------------------------   x less than=0.18um    19%      24%
                                  ----------------------------------
                                  0.18um less than
                                  x less than=0.25um     9%      16%
                                  ----------------------------------
                                  0.25um less than
                                  x less than=0.35um    21%      19%
-------------------------------   ----------------------------------
Application     2005     2004     0.5um and above       10%      10%
===============================   ----------------------------------
Computer           21%      22%
-------------------------------   ----------------------------------
Communication      48%      45%   Customer Type      2005     2004
-------------------------------   ==================================
Consumer           28%      29%   Fabless               70%      69%
-------------------------------   ----------------------------------
Memory              1%       2%   IDM                   30%      31%
-------------------------------   ----------------------------------
Others              2%       2%   System                 0%       0%
-------------------------------   ----------------------------------


Recent Developments / Announcements
Jan. 16, 2006   Europractice and UMC Offer 90nm Multi-Project Wafer 
                Prototyping and Production Service
Jan. 09, 2006   UMC Board Approves Resignation of UMC Chairman Bob 
                Tsao; CEO Jackson Hu Elected to Position as Chairman
Dec. 07, 2005   UMC Develops Ultimate Spacer Process to Enhance MOSFET
                Device Performance for 65nm and Beyond
Dec. 06, 2005   XILINX AND UMC EXTEND LONG TIME MANUFACTURING 
                RELATIONSHIP TO 65NM & BELOW
Nov. 21, 2005   SYNOPSYS AND UMC PARTNER ON LOW POWER 90NM REFERENCE 
                DESIGN FLOW TO DELIVER FASTER TIME TO SOC SUCCESS
Nov. 09, 2005   UMC Brings Comprehensive Reference Design Flow to 90nm
                SoC Designers
Oct. 26, 2005   UMC 3Q 2005 Financial Results

                      Please visit UMC's website
               
http://www.umc.com/english/news/index.asp
        for further details regarding the above announcements.


First Quarter of 2006 Outlook & Guidance

Quarter-over-quarter Guidance:

-- Wafer shipments: to decrease by 7% to 8% points

-- Wafer ASP in US$: to decrease by 1% to 2% points

-- NT$ appreciation to impact revenue by 5% points

-- Capacity utilization rate: approximately 75%

-- Profitability: approximately breakeven at the operating level

-- Percentage of 0.18um & below revenues: to be 65% of the revenue while 90nm is expected to be in the mid-teen %

-- The consumer segment is expected to be the strongest followed by computer segment and communication segment

-- 2006 CAPEX budget: US$1 billion
Conference Call / Webcast Announcement

Tuesday, February 14, 2006

Time: 9:00 PM (Taipei) / 8:00 AM (New York) / 1:00 PM (London)

Dial-in numbers and Access Codes:
Asia/Europe:        +1-617-614-4910
North America:      800-591-6944
Access Code:        UMCCall

  A live webcast and replay of the 4Q05 results announcement will be
                  available at 
www.umc.com under the
            "Investor Relations \ Investor Events" section.


About UMC

UMC (NYSE: UMC, TSE: 2303) is a leading global semiconductor foundry that manufactures advanced process ICs for applications spanning every major sector of the semiconductor industry. UMC delivers cutting-edge foundry technologies that enable sophisticated system-on-chip (SoC) designs, including volume production 90nm, industry-leading 65nm, and mixed signal/RFCMOS. UMC's 10 wafer manufacturing facilities include two advanced 300mm fabs; Fab 12A in Taiwan and Singapore-based Fab 12i are both in volume production for a variety of customer products. The company employs approximately 12,000 people worldwide and has offices in Taiwan, Japan, Singapore, Europe, and the United States. UMC can be found on the web at http://www.umc.com.

Safe Harbor Statements

Except for statements in respect of historical matters, the statements in this release contain "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual performance, financial condition or results of operations of UMC to be materially different from what is stated or may be implied in such forward-looking statements. Investors are cautioned that actual events and results could differ materially from those statements as a result of a number of factors, including, among other things: our dependence upon the frequent introduction of new services and technologies based on the latest developments in our industry; the intensely competitive semiconductor, communications, consumer electronics and computer industries and markets; the risks associated with international global business activities; our dependence upon key personnel; general economic and political conditions, including those related to the semiconductor, communications, consumer electronics and computer industries; possible disruptions in commercial activities caused by natural and human-induced events and disasters, including terrorist activities, armed conflicts and highly contagious diseases; reduced end-user purchases relative to expectations and orders; fluctuations in foreign currency exchange rates; and those risks identified in the section entitled "Risk Factors" in UMC's amended Annual Report on Form 20-F/A for the year ended December 31, 2004 filed with the U.S. Securities and Exchange Commission on February 13, 2006.

The financial statements included in this release are unaudited and unconsolidated, and prepared and published in accordance with ROC GAAP. Investors are cautioned that there are many differences between ROC GAAP and U.S. GAAP, as described in note 33 to the financial statements on Form 20-F/A for the year ended December 31, 2004 filed with the U.S. Securities and Exchange Commission on February 13, 2006.

The forward-looking statements in this release reflect the current belief of UMC as of the date of this release and UMC undertakes no obligation to update these forward-looking statements for events or circumstances that occur after such date or to reflect the occurrence of unanticipated events.

- FINANCIAL TABLES TO FOLLOW -
                 UNITED MICROELECTRONICS CORPORATION
           Unaudited Condensed Unconsolidated Balance Sheet
                       As of December 31, 2005
 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)


                                                  December 31, 2005
                                               -----------------------
                                                 US$     NT$      %
                                               ------- -------- ------
ASSETS
Current Assets
  Cash and Cash Equivalents                     2,942   96,597   29.6%
  Marketable Securities                           149    4,883    1.5%
  Notes & Accounts Receivable                     377   12,360    3.8%
  Inventories                                     303    9,963    3.0%
  Other Current Assets                            136    4,465    1.4%
                                               ------- -------- ------
    Total Current Assets                        3,907  128,268   39.3%
                                               ------- -------- ------

Non-Current Assets
  Funds and Long-term Investments               1,069   35,090   10.8%
  Other Financial Assets                           30      978    0.3%
  Property, Plant and Equipment                 4,563  149,809   45.9%
  Intangible Assets                               125    4,105    1.3%
  Other Assets                                    243    7,971    2.4%
                                               ------- -------- ------
    Total Non-Current Assets                    6,030  197,953   60.7%
                                               ------- -------- ------
TOTAL ASSETS                                    9,937  326,221  100.0%
                                               ======= ======== ======

LIABILITIES
Current Liabilities
  Payables                                        522   17,131    5.3%
  Current Portion of Long-term Interest-
   Bearing Liabilities                            312   10,250    3.1%
  Other Current Liabilities                        28      923    0.3%
                                               ------- -------- ------
    Total Current Liabilities                     862   28,304    8.7%
                                               ------- -------- ------

Non-Current Liabilities
  Bonds Payable                                 1,097   36,009   11.0%
  Other Liabilities                               110    3,625    1.1%
                                               ------- -------- ------
    Total Non-Current Liabilities               1,207   39,634   12.1%
                                               ------- -------- ------
TOTAL LIABILITIES                               2,069   67,938   20.8%
                                               ------- -------- ------

STOCKHOLDERS' EQUITY
Capital Stock                                   6,031  197,984   60.7%
Capital Reserve                                 2,601   85,381   26.2%
Retained Earnings, Unrealized Long-term
 Investment Loss and Translation Adjustment       512   16,804    5.1%
Treasury Stock                                 (1,276) (41,886) -12.8%
                                               ------- -------- ------
TOTAL STOCKHOLDERS' EQUITY                      7,868  258,283   79.2%
                                               ------- -------- ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      9,937  326,221  100.0%
                                               ======= ======== ======

----------------------------------------------------------------------
Note: New Taiwan Dollars have been translated into U.S. Dollars at the
      December 31, 2005 exchange rate of NT$32.83  per U.S. Dollar.
      All figures are in ROC GAAP.




                  UNITED MICROELECTRONICS CORPORATION
          Unaudited Condensed Unconsolidated Income Statement
 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
                   Except Per Share and Per ADS Data

                                      Year over Year Comparison
                               ---------------------------------------
                                      Three-Month Period Ended
                                December 31,    December 31,
                                    2005            2004          %
                               --------------- --------------- -------
                                US$     NT$     US$     NT$     Chg.
                               ------ -------- ------ -------- -------
Net Sales                        837   27,468    860   28,229    -2.7%
Cost of Goods Sold              (685) (22,495)  (662) (21,741)    3.5%
                               ------ -------- ------ -------- -------
Net Gross Profit                 152    4,973    198    6,488   -23.4%
                               ------ -------- ------ -------- -------
                                18.1%    18.1%  23.0%    23.0%
Operating Expenses
  - Sales & Marketing             19      612     20      658    -7.0%
  - General & Administrative      32    1,050     26      841    24.9%
  - Research & Development        72    2,383     65    2,150    10.8%
                               ------ -------- ------ -------- -------
                                 123    4,045    111    3,649    10.9%
                               ------ -------- ------ -------- -------
Operating Income (Loss)           29      928     87    2,839   -67.3%
                                 3.4%     3.4%  10.1%    10.1%

Net Non-Operating Income
 (Expenses)                       64    2,116    (46)  (1,506) -240.5%
                               ------ -------- ------ -------- -------
Income (Loss) before Income
 Tax                              93    3,044     41    1,333   128.4%
                                11.1%    11.1%   4.7%     4.7%

Income Tax (Expense) Benefit      (0)      (0)    (0)      (0)   51.7%
                               ------ -------- ------ -------- -------
Net Income (Loss)                 93    3,044     41    1,333   128.4%
                               ====== ======== ====== ======== -------
                                11.1%    11.1%   4.7%     4.7%

Earnings per Share             0.005     0.16  0.002     0.07
                               ------ -------- ------ --------
Earnings per ADS (2)           0.024     0.80  0.011     0.35
                               ------ -------- ------ --------
Weighted Average Number of
 Shares Outstanding 
 (in millions)                         17,405          18,966
                                      --------        --------


                                    Quarter over Quarter Comparison
                               ---------------------------------------
                                      Three-Month Period Ended
                                December 31,    September 30,
                                    2005            2005          %
                               --------------- --------------- -------
                                 US$     NT$     US$     NT$     Chg.
                               ------ -------- ------ -------- -------
Net Sales                        837   27,468    718   23,579    16.5%
Cost of Goods Sold              (685) (22,495)  (628) (20,625)    9.1%
                               ------ -------- ------ -------- -------
Net Gross Profit                 152    4,973     90    2,954    68.3%
                               ------ -------- ------ -------- -------
                                18.1%    18.1%  12.5%    12.5%
Operating Expenses
- Sales & Marketing               19      612     19      618    -1.0%
- General & Administrative        32    1,050     27      877    19.7%
- Research & Development          72    2,383     61    2,019    18.0%
                               ------ -------- ------ -------- -------
                                 123    4,045    107    3,514    15.1%
                               ------ -------- ------ -------- -------
Operating Income (Loss)           29      928    (17)    (560) -265.7%
                                 3.4%     3.4%  -2.4%    -2.4%

Net Non-Operating Income 
 (Expenses)                       64    2,116     83    2,725   -22.3%
                               ------ -------- ------ -------- -------
Income (Loss) before Income 
 Tax                              93    3,044     66    2,165    40.6%
                                11.1%    11.1%   9.2%     9.2%

Income Tax (Expense) Benefit      (0)      (0)    (0)      (0)  -33.6%
                               ------ -------- ------ -------- -------
Net Income (Loss)                 93    3,044     66    2,165    40.6%
                               ====== ======== ====== ======== -------
                                11.1%    11.1%   9.2%     9.2%

Earnings per Share             0.005     0.16  0.004     0.12
                               ------ -------- ------ --------
Earnings per ADS (2)           0.024     0.80  0.018     0.60
                               ------ -------- ------ --------
Weighted Average Number of 
 Shares Outstanding 
 (in millions)                         17,405          18,434
                                      --------        --------

----------------------------------------------------------------------
Note:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the
    December 31, 2005 exchange rate of NT$32.83 per U.S. Dollar.
    All figures are in ROC GAAP.

(2) 1 ADS equals 5 common shares.



                 UNITED MICROELECTRONICS CORPORATION
         Unaudited Condensed Unconsolidated Income Statement
Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)
                  Except Per Share and Per ADS Data


                        For the Three-Month
                            Period Ended        For the year Ended
                         December 31, 2005       December 31, 2005
                       ---------------------- -----------------------
                        US$     NT$      %      US$      NT$     %
                       ------ -------- ------ ------- -------- ------
Net Sales                837   27,468  100.0%  2,765   90,776  100.0%
Cost of Goods Sold      (685) (22,495) -81.9% (2,424) (79,580) -87.7%
                       ------ -------- ------ ------- -------- ------
Net Gross Profit         152    4,973   18.1%    341   11,196   12.3%
                       ------ -------- ------ ------- -------- ------

Operating Expenses
  - Sales & Marketing     19      612    2.2%     69    2,281    2.5%
  - General &
   Administrative         32    1,050    3.8%     98    3,225    3.6%
  - Research &
   Development            72    2,383    8.7%    255    8,358    9.2%
                       ------ -------- ------ ------- -------- ------
                         123    4,045   14.7%    422   13,864   15.3%
                       ------ -------- ------ ------- -------- ------
Operating Income (Loss)   29      928    3.4%    (81)  (2,668)  -3.0%

Net Non-Operating
 Income (Expenses)        64    2,116    7.7%    295    9,696   10.7%
                       ------ -------- ------ ------- -------- ------
Income (Loss) before
 Income Tax               93    3,044   11.1%    214    7,028    7.7%

Income Tax (Expense)
 Benefit                  (0)      (0)   0.0%     (0)      (1)   0.0%
                       ------ -------- ------ ------- -------- ------
Net Income (Loss)         93    3,044   11.1%    214    7,027    7.7%
                       ====== ======== ====== ======= ======== ======

Earnings per Share     0.005     0.16          0.012     0.38
                       ------ --------        ------- --------
Earnings per ADS (2)   0.024     0.80          0.058     1.90
                       ------ --------        ------- --------
Weighted Average Number
 of Shares
Outstanding (in
 millions)                     17,405                  18,411
                              --------                --------


---------------------------------------------------------------------
Note:

(1) New Taiwan Dollars have been translated into U.S. Dollars at the
    December 31, 2005 exchange rate of NT$ 32.83 per U.S. Dollar.
    All figures are in ROC GAAP.

(2) 1 ADS equals 5 common shares.




                  UNITED MICROELECTRONICS CORPORATION
      Unaudited Condensed Unconsolidated Statement of Cash Flows
             For The Twelve Months Ended December 31, 2005
 Figures in Million of New Taiwan Dollars (NT$) and U.S. Dollars (US$)

                                                        US$     NT$
                                                      ------- --------
Cash flows from operating activities :
    Net Income                                           214    7,027
    Depreciation & Amortization                        1,478   48,517
    Reversal on allowance for doubtful accounts           (5)    (151)
    Long-term investment loss accounted for under the
     equity method                                        82    2,677
    Cash dividends received under the equity method       22      725
    Impairment loss                                        5      160
    Recovery on decline in market value and
     absolesence of inventories                          (28)    (920)
    Fixed assets transferred to loss                       0        9
    Gain on disposal of investments                     (308) (10,096)
    Loss on disposal of property, plant and equipment      1       19
    Exchange loss on long-term liabilities                 2       66
    Amortization of deferred grant income                 (3)     (90)
    Change in working capital & others                   (59)  (1,931)
                                                      ------- --------
    Net cash provided from operating activities        1,401   46,012

Cash flows from investing activities :
    Cash proceeds from merger                             29      944
    Decrease in other financial assets, net               22      706
    Increase in short-term investments                   (54)  (1,765)
    Increase in long-term investments                   (215)  (7,056)
    Proceeds from disposal of long-term investments      340   11,153
    Proceeds from liquid of long-term investments        406   13,347
    Acquisition of property, plant and equipment        (566) (18,587)
    Proceeds from disposal of property, plant and
     equipment                                             4      129
    Increase in other assets - others, net                (5)    (161)
    Increase in deferred charges                         (41)  (1,356)
    Increase in other receivables                       (157)  (5,138)
                                                      ------- --------
    Net cash used in investing activities               (237)  (7,784)

Cash flows from financing activities :
    Decrease in short-term loans, net                    (58)  (1,904)
    Repayment of long-term loans                        (492) (16,154)
    Proceeds from bonds issued                           380   12,479
    Redemption of bonds                                  (86)  (2,820)
    Increase in deposits-in                               (0)      (1)
    Cash dividend                                        (53)  (1,759)
    Treasury stock                                      (499) (16,379)
    Employee stock option                                 50    1,642
    Remuneration to directors and supervisors             (1)     (27)
                                                      ------- --------
    Net cash used in financing activities               (759) (24,923)

Effect of exchange rate on cash and cash equivalents      (2)     (55)
                                                      ------- --------
Net Increase in cash and cash equivalents                403   13,250
                                                      ------- --------

Cash and cash equivalents at beginning of period       2,539   83,347

Cash and cash equivalents at end of period             2,942   96,597
                                                      ======= ========


----------------------------------------------------------------------

Note: New Taiwan Dollars have been translated into U.S. Dollars at the
      December 31, 2005 exchange rate of NT$ 32.83 per U.S. Dollar.
      All figures are in ROC GAAP.




Contact:
UMC
Chitung Liu, +886-2-2700-6999 ext. 6957

Email Contact
or
Bowen Huang, +886-2-2700-6999 ext. 6957

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or
Christensen IR
Tip Fleming, +1-917-412-3333

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or
Jane Liu, +852-2117-0861

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